Life insurance is a topic that most people pay no attention to until a situation arises that shows how much they need it. If you’re in a younger age group, you feel immortal. As an adult, your employer may provide life insurance until you change jobs and suddenly find yourself without it. Or you have reached a time of life where life insurance has become part of your overall asset protection. Whatever stage of life you’re in, life insurance can help to stabilize your finances and provide security for those you love.
Do You Need Life Insurance?
You might think life insurance is only for older people, but having a life insurance policy can benefit people of any age. If you have a spouse and children, life insurance provides for their financial maintenance if something should happen to you. Even if you are single, life insurance can be of value to pay off your debts, pay for your funeral, or provide care for elderly parents or disabled family members. If you own a small business, the loss of your presence and abilities could mean significant hardship for the company, and life insurance for key personnel might be in order. Retirees might want to secure an inheritance for those left behind when they pass, and life insurance offers an excellent way to provide funds. Even stay-at-home parents might wish to get a life insurance policy to help cover the costs of caring for their families if they had an unexpected illness or accident. Each life situation is different, and life insurance may present a solution for each one.
Types of Life Insurance
Several different types of life insurance policies are available. Your insurance agent can help you determine the right one for your needs. Life insurance falls into two basic categories, whole life, and term life insurance. Term life insurance is in effect for a specified number of years, and if you don’t die within the time period, there is no payout on the policy. Whole life insurance covers you throughout your life and has a cash value, which you can borrow against or withdraw. Within these categories are sub-groups such as universal life, guaranteed universal life, and guaranteed issue life insurance. Each type has both advantages and disadvantages. Some require medical exams to qualify for coverage, while others do not. Different types of policies provide different payouts and involve different price points.
How Much Life Insurance Is Enough?
Figuring out how much life insurance I need is a common concern. The answer can depend on how much income you have, how much debt you owe and how much you can afford in premiums. Some people may opt for a minimal amount of insurance with a premium that fits a limited budget. This can be enough to cover a funeral or debts and leave a small amount for loved ones. Other people may wish to provide a significant amount to pay off a mortgage or pay for college costs for children. In this case, the premium for the insurance would be much greater.
Determining Beneficiaries For Your Insurance
Generally, people choose a spouse or children as beneficiaries for their life insurance policy. However, you might want to provide for elderly parents or someone who needs additional help with living expenses. Some people choose a charitable institution as the beneficiary for their insurance. Individuals should carefully review whom they want to help with the money and whether it will be helpful for them. If changes occur in your family, marital situation, or choice of charity, you should review your beneficiaries to reflect your current needs.
Although life insurance coverage can be a complex subject, understanding a few fundamental principles will help you to choose the right one for your needs. Once you have acquired the policy, you can be assured that your loved ones will be adequately cared for if something unexpected occurs.